Market Trends & ResearchRealtyHop Housing Affordability Index: August 2023

RealtyHop Housing Affordability Index: August 2023

In this August edition of the RealtyHop Housing Affordability Index, we examine what American households across the 100 largest cities need to spend on housing to find out:

Is homeownership affordable or possible for the average American family?

Low inventory and high-interest rates continue to make homeownership unaffordable for potential buyers. Despite these tough market conditions, many buyers are still looking for property, keeping demand high. Those who have put off buying in recent years also continue to face unattractive options.

Key Findings

  • Homeowners in 68 major cities must spend over 30% of their annual income on homeownership; that’s the same as last month.
  • In the 25 most unaffordable housing markets nationwide, homeowners allocate 40% or more of their income toward homeownership costs.
  • The median purchase price increased this month in two of the least affordable housing markets – Miami and Newark
  • St. Louis and Oklahoma City are the only cities in the five most affordable housing markets to become more affordable this month.

The 5 Least Affordable Housing Markets

1. Miami, FL

Miami is again the least affordable housing market this August. The median list price for a home increased to $605,000, where homeowners can expect to spend $3,250 monthly on mortgage and property tax payments. Low inventory and high demand across multiple generations have kept housing prices high for Miami residents.

2. Los Angeles, CA

Los Angeles remains the second most unaffordable housing market nationwide. The median household income of $73,560 means that the average family would need to spend 77.29% of their annual income on mortgage and tax payments in order to own a home. LA also remains stifled by low inventory; experts argue that removing single-family zoning could help increase housing opportunities.

3. Newark, NJ

Newark Newark continues to be the third most cost-burdened housing market. The median purchase price for a home increased to $399,500 in August, meaning residents will now need to direct 74.06% of their income toward homeownership costs.

Newark officials are working to build more housing opportunities and lower costs for residents. The City council recently approved new tax abatements for three large residential buildings that will span 40 floors.

4. New York, NY

New York City remains the fourth least affordable housing market in the country. The median purchase price for a home decreased from $815,000 to $789,999 this month. Prospective buyers will now need to spend $4,031 monthly, on average, to own a home.

5. Hialeah, FL

Hialeah rounds out our list as the fifth most unaffordable housing market. The city’s homeownership index remained the same this month, with homeowners needing to spend 66.10% of their income to afford a median-priced home worth $460,000.

The 5 Most Affordable Housing Markets

1. Detroit, MI

Detroit remains the most affordable housing market this month. The median purchase price for a home slightly increased to $80,000, meaning that the average family would need to spend just $474.11 monthly in order to own a home.

2. Wichita, KS

Wichita is the second most affordable housing market nationwide. Homeowners with a median income of $63,360 can expect to direct only 19.70% toward homeownership costs.

The median purchase price for a home increased this month, as Wichita has seen low inventory come to market. Experts predict home prices will continue to rise due to a competitive market with active buyers.

3. St. Louis, MO

St. Louis jumped one spot in our rankings to become the third most affordable housing market. Home prices slightly decreased to $180,000, meaning a family generating the average income would only need to spend $972 per month on mortgage payments and property taxes.

4. Cleveland, OH

Cleveland dropped one spot to become the fourth most affordable market this August. An average family making $37,306 would only need to spend 22.11% of their income on mortgage and tax costs in order to own a home.

Foreclosures are down 4% from last month in Cleveland, pointing to a rebounding housing market that could further improve conditions for buyers.

5. Fort Wayne, IN

Oklahoma City broke into our five most affordable cities this month. Given the median home asking price of $237,900, homeowners only need to spend 23.37% of their income on housing costs.

Housing Markets to Watch

The following housing markets witnessed significant changes this month.

Richmond, VA

Richmond jumped eight spots this month, becoming the 48th least affordable housing market. The median home price increased to $360,000, with homeowners needing to spend 37.03% of their income on housing; that’s 2.89% more than last month.

Durham, NC

Durham dropped seven spots in the rankings and became more affordable for homebuyers this August. Homeowners with a median household income of $50,840 should expect to spend $1,152.03 monthly toward mortgage payments and property taxes.

Home sales have decreased since last year. However, many homebuyers are still paying above the asking price. Prospective buyers should expect to face a market with low inventory and high competition.

Milwaukee, WI

Milwaukee became less expensive for homebuyers this month, becoming the 79th least affordable city. The median purchase price dropped to $180,000, and homeowners now spend 27.19% of their income on housing costs, or 5.26% less than last month.

Methodology

The RealtyHop Housing Affordability Index analyzes proprietary and ACS Census data to provide an index of housing affordability and homeownership burden across the 100 most populous cities in the country. Median home prices are calculated using over 300,000 listings in the RealtyHop database over the month prior to publication.

To calculate the index, the following statistics are used:

1) Projected median household income

2) Median for-sale home listing prices via RealtyHop data

3) Local property taxes via ACS Census data

4) Mortgage expenses, assuming a 30-year mortgage, 5.5% interest rate, and 20% down payment.

Methodology Update

To better reflect the current housing market for the general America homebuyers, we have updated our methodology to include only the following property types: single-family homes, module homes, condos, co-ops, and townhouses. You may therefore see discrepancies between prior reports based on this change.

See below for previous RealtyHop Housing Affordability Studies:

 

Full Data

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